Employers advised to take KiwiSaver pay reviews in two stepsMany employers in the middle of wage and salary reviews are finding they have to urgently re-work pay increases to accommodate the new compulsory KiwiSaver employer contributions, says David Lowe, Employment Services Manager for the Northern Employers and Manufacturers Association.
“Many businesses work on a July 1st financial year and review pay tied to that date,” Lowe said.
“With pay reviews for the period through to June 2008 well underway, many employers have had to re-work them after the Budget.
“Employers are advised to offer dual wage reviews to all employees, one to deal with employees choosing to contribute to KiwiSaver which will require employer contributions from April 1st, 2008, and the second review to deal with employees not contributing.
“The introduction of compulsory employer contributions requires everyone to alter how they view their pay to recognize that some of the money paid to them won’t be available until they are aged 65.
“This is a significant change; employers are annoyed it was thrust on them without notice and without adequate lead time.
“Some employers had already made commitments to staff to pay wage increases beyond April 2008 to find they had to add on the costs of compulsory employer contributions, on top of the extra week’s holiday brought in earlier this year.
“Employers jumping in to pay employer contributions boots and all by offering to contribute at 4% from the start of KiwiSaver are the exception.
“Dealing with the added cost and compliance announced in the Budget is proving difficult enough for most employers.”